Why we need a Leveson Inquiry for the banks

Why we need a Leveson Inquiry for the banks

By Bernadette Meaden

May 11, 2012

On the eve of the local elections, some extraordinary remarks by a Minister probably got less attention than they deserved.

Defence Secretary and multi-millionaire property developer Philip Hammond tried to shift the blame[1] for the financial crisis in the direction of ordinary UK households, saying, ‘the banks had to lend to someone’ and the people who took out loans were ‘consenting adults’.

So, in the opinion of this Cabinet member the banks which invented and promoted credit cards, mis-sold Payment Protection Insurance, mis-sold endowment mortgages, conjured financial products out of thin air and sold them to customers who did not understand them[2], and finally required billions of pounds from the Treasury to keep them afloat, were actually just obeying greedy consumers.

Mr Hammond was Shadow Chief Secretary to the Treasury and responsible for formulating Conservative economic policy whilst in opposition. If his remarks accurately reflect the Conservative party’s attitude towards banks and bankers, it explains why the government has been so soft on them. It would explain why it has failed to force them to lend to business, even when Coalition partners like Lord Oakeshott have been begging them to do so.

As Treasury spokesman in the Lords he dismissed Project Merlin, the government’s attempt to sort out the banks as ‘pitiful’, declaring, “If this is robust action on bank bonuses, my name’s Bob Diamond and I’m going to claim my £9 million bonus next week”. Lord Oakeshott finally resigned[3] as a Treasury spokesman: in sheer frustration, one imagines.

All this makes the growing calls for a Leveson-style inquiry into the banks and the financial crisis difficult to ignore. Perhaps the most persuasive advocate for such an inquiry is Paul Moore, who was sacked from HBOS for trying to blow the whistle on the unsustainable way in which the bank was operating, and who says[4]; “The banking crash was more than a financial disaster. We now know that it arose from the virtual hijacking by bankers of the political and regulatory process.”

Power over our economies must be returned to democratically accountable politicians, not just for the sake of our economies but for social cohesion. The longer the real culprits go unidentified, the more scope there is for extremist parties to scapegoat minorities, blaming them for our problems. In Greece the frighteningly neo-Nazi Golden Dawn has won seats in Parliament with a campaign that was openly threatening to immigrants, and in TV adverts[5] said, ‘Let’s rid this country of the stench’.

Until the responsibility for our problems is placed where it truly belongs, it will be free-floating and available to be dangerously exploited. So let’s have an equivalent of the Leveson Inquiry for the banks, and let’s hope it’s not too late, and the shredding machines and delete keys have not been over-utilised.

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